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4 Considerations When Hiring Employees Abroad

When a small business grows internationally, employing foreign workers who know the culture and language can help improve operations and create stronger bonds with customers. But before businesses can reap these benefits, they should plan for the logistics and legalities of having laborers abroad. Here are four key considerations when hiring foreign employees.

1. Understand International Compensation Norms

Different countries often have different norms related to compensation packages, says Shan Nair, an expert in international expansion and co-founder of Nair & Co., a global professional services consultancy. "Before you even set foot abroad, make sure you have a good idea of the going rates of remuneration," Nair says.

When making international payments to workers in a foreign country, business owners can use a free online currency converter to understand international exchange rates. To save money, they can also sign up for email market-rate alerts through a trusted online foreign exchange service to capture their preferred exchange rates.

“Before you even set foot abroad, make sure you have a good idea of the going rates of remuneration.”

— Shan Nair, co-founder of Nair & Co.

2. Understand the Legal Implications

When a small firm hires employees who will be working overseas, there can be legal considerations that vary from country to country. For example, Canada and the U.K. tend to have more strict employment laws than the U.S., says Donald C. Dowling, Jr., an international employment attorney and partner with the New York law firm White & Case. "U.S. employers are free to fire staff with no notice or severance pay - if the dismissal is not for a discriminatory or retaliatory reason," he says. "In U.K. and Canada, though, even absent any discrimination, employers have to pay damages or notice pay for an unfair dismissal." Both countries also require employers to provide paid vacations and state holidays, Dowling says.

3. Plan for the Logistics of Different Time Zones

Employers should be prepared to negotiate the time zone divide with their employees or contractors. Setting realistic expectations with the team is essential to bridging the time zone gap, says Jon Tucker, senior strategist at Compete Marketing Group, an online marketing agency in San Diego that employs multiple international contractors. "You need to be clear on when people are expected to work or how they're supposed to communicate when they're actually working," Tucker says.

4. Hiring a Contractor or Employee

Another crucial decision is whether to engage an independent contractor or payrolled employee. Dowling says that many companies looking to hire their first official international employee often think engaging a contractor is easier than hiring a full-time employee. But that's not always the case. Making team members contractors requires them to have their own business, set their own hours and use their own equipment, for example.

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By thinking through everything from logistics to legal requirements, business owners can prepare themselves for the added responsibility of managing foreign workers.

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